2 bargain gold mining stocks: OceanaGold Corporation and Independence Group NL

OceanaGold Corporation (ASX:OGC) and Independence Group NL (ASX:IGO) could boost your portfolio. Here's why.

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2014 has been an astounding year for investors in OceanaGold Corporation (ASX: OGC) and Independence Group NL (ASX: IGO). Indeed, shares in the two gold mining companies have risen by 80% and by 44% respectively, both of which are above and beyond the 5% gains made by the ASX over the same time period. However, despite their meteoric rise in recent months, both companies seem to offer great value for money at current price levels. As such, they could prove to be winning investments. Here's why.

Growth potential

Clearly, investors in gold mining stocks are first and foremost interested in future growth prospects. On this front, neither OceanaGold nor Independence Group disappoint. In fact, they are set to deliver vast growth in earnings over the next couple of years, with OceanaGold expected to grow its bottom line by 85% in each of the next two financial years and Independence Group offering even higher growth potential. Indeed, it is all set to grow EPS by an astounding 114% per annum over the next two financial years, which shows that there is a whole lot of life left in the two companies' share prices despite their recent rise.

Top notch value

On the topic of value, clearly shares in both companies are more expensive than they were at the turn of the year. Furthermore, neither stock is what you would call 'cheap', since they trade on P/Es of 18 (Independence Group) and 16.7 (OceanaGold). However, when their growth potential is taken into account the picture looks a lot different. That's because OceanaGold's price to earnings growth (PEG) ratio is just 0.2, while Independence Group's is just 0.16. Both of these numbers are among the lowest in the ASX and show that astonishing growth potential is on offer at a very reasonable price.

Looking ahead

Clearly, strong prospects and actual performance are two very different things. Indeed, a falling gold price and logistical challenges at the two companies' assets could cause them to miss their optimistic projections. However, due to their extremely favourable price, a degree of disappointment appears to already be priced in, since shares offer incredible value at current levels. As such, the risk/reward ratio appears to be in investors' favour, which could make OceanaGold and Independence Group highly profitable investments moving forward.

Motley Fool contributor Peter Stephens does not own shares in any of the companies mentioned.

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